Spain pays lower interest rates in debt auction

MADRID (AP) -- Spain has raised (euro) 4.5 billion ($5.9 billion) in short-term debt auctions in which it paid sharply lower interest rates amid speculation that the country will seek aid to manage its finances.

The Treasury said it sold (euro) 3.5 billion in 12-month bills at an average interest rate of 2.84 percent, down from 3.07 percent in the last such auction Aug. 21. It sold (euro) 1.01 million in 18-month bills at a yield of 3.07 percent, down from 3.35 percent.

Demand in Tuesday's auction was more than double the amount offered in the 12-month bills and more than three times for the 18-month bills.

Spain's borrowing costs have fallen from unsustainable highs in recent months after the recession-wracked country said it may apply for international aid if the conditions are reasonable.